Tax Strategies Flashcards

What is a key tax benefit of importing components into a U.S. Foreign-Trade Zone (FTZ)?

Answer: Duty deferral until goods enter U.S. commerce, and possible inverted tariff savings

FTZs defer duties until goods leave the zone for U.S. commerce and may let companies pay the lower duty rate on finished goods.

What is the primary method U.S. Customs uses to determine the dutiable value of imported goods?

Answer: Transaction value

Transaction value, the price actually paid or payable plus certain additions, is the primary customs valuation method.

What determines the duty rate applied to an imported product in the United States?

Answer: Its classification under the Harmonized Tariff Schedule

HTS classification sets the applicable duty rate, so accurate classification is a key cost-control strategy.

Goods stored in a U.S. customs bonded warehouse can generally remain there without paying duty for up to how long?

Answer: 5 years

Goods may stay in a bonded warehouse for up to five years from the date of importation before duties must be paid or the goods exported.

A procurement manager must collect a supplier's taxpayer identification number before paying an independent contractor. Which IRS form is used?

Answer: Form W-9

Form W-9 collects the payee's TIN so the payer can correctly file information returns such as Form 1099.

If a vendor fails to provide a valid TIN, the payer may be required to apply backup withholding at what federal rate?

Answer: 24%

Backup withholding is currently 24% when a payee fails to furnish a correct TIN.

Which multistate effort aims to simplify and standardize sales and use tax administration across member states?

Answer: Streamlined Sales and Use Tax Agreement

The SSUTA standardizes definitions, exemption certificates, and administration among participating states.